Charter To File Chapter 11; Stock To Be Worthless

By Eric Savitz

Charter Communications(CHTR) will file for protection from creditors under Chapter 11 of the federal bankruptcy code by April 1 as part of a debt restructuring plan, the cable company announced. Under terms of the deal, current Charter common shares will be worthless.

Charter said it reached an agreement in principle with a committee of certain of its debt holders that will reduce its debt by about $8 billion. Under terms of the deal, two of the company’s units will make interest payments totalling $74 million on certain senior notes that were due on January 15. Charter said funding for the restructuring will come from cash on hand, an exchange of debt for new notes, and proceeds of an equity offering for which it has received a “back-stop commitment” from certain noteholders. Various classifications of Charter debt will receive some combination of new notes, common stock and warrants: Common stock holders “will not receive any amounts on account of their common stock, which will be canceled.”

The company said Paul Allen will remain an investor in the company, with the largest voting stake.

Trader creditors are expected to be paid in full, the company said.

Meanwhile, the company also posted preliminary Q4 results. Charter expects pro forma revenue of $1.65 billion, up 7% from a year earlier. Pro forma EBITDA is expected to be $619 million, up 10.1% from a year ago.

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There are 43 comments

FEBRUARY 12, 2009 2:29 P.M.

Frank C. wrote:

How does Paul Allen remain the main shreholder while all othe share holders stock is worthless? THIS SOUNDS LIKE ANOTHER RIP OFF.

FEBRUARY 12, 2009 2:46 P.M.

Gosh wrote:

RIP OFF is the name of the game, the difference is how can you do it legally. The gov't can always do it legally.

FEBRUARY 12, 2009 2:50 P.M.

dave k. wrote:

how can they be bankrupt when they have all that money on hand?

FEBRUARY 12, 2009 2:56 P.M.

rick wrote:

this is a situation where the secured bond holders, Paul Allen, will take a reduction in the amounts owed them, while having the common shareholders wiped out. net effect is by removing the dilutive value of shareholders, bond holders will own 100% of the company by trading their writedown of bond value.

FEBRUARY 12, 2009 2:57 P.M.

mike c. wrote:

Iguess Paul Allen will want a bail out too.

FEBRUARY 12, 2009 2:58 P.M.

Steve wrote:

This one definetly sounds like a scheme. Of course Paul Allen has enough money to keep the company out of Bankruptcy, but he obviosly wants to get Charter out of some liabilities, and he has the company organized in such a way that he will still remain in control after the liabilities are exponged. Going forward, I bet charter does VERY well. Of course, the creditors have been dupped, but this is the corporate raider way, bankruptcy is meant to help those who need it, but those who can manipulate it for their own good, ie trump, etc.. are huge beneifactors. Remember, Paul Allen didn't have to sign personal guarantees for the companies debt, for if he did, there would be no bankruptcy going on here for sure. BIG SCAM, will turn into bigger profits for Mr. Allen. It's still better than communism, is it fair, no, just learn the game, and be sure not to put all your eggs in one basket.

FEBRUARY 12, 2009 2:59 P.M.

houndog wrote:

Even this blind dog knew it was coming but held on for the faith in it and Paul Allen.. Missed placed like my cain. NEXT!

FEBRUARY 12, 2009 3:03 P.M.

John S. wrote:

Paul Allen should stick to something he knows how to do. It's obvious he can't run a company that has real competition. If cable companies ever stop thinking they are the only game in town, they might actually become competitive and produce a decent product. Sorry that yet again the shareholders get stiffed. Let's see: a net gain of 45000 "revenue generating units" over the last quarter, earnings of $600M, and we're standing in line for our handout. Things that make you go "hmmm"...

FEBRUARY 12, 2009 3:18 P.M.

Do not trust Paul Allen wrote:

Paul Allen thinks of himself and no one else. Investors should not trust this crook. We believed in the wire world BS. And now with still 800M+ in the bank and increasing revenue the best solution is stiff the shareholders and take everything. Good thing we can all learn from our mistake. And investing with PA is a mistake. I can understand if the company does not have a nickle in the bank. Why can't they do cost reduction measures like everyone else.

FEBRUARY 12, 2009 3:21 P.M.

neverevertrustPA wrote:

Paul Allen thinks of himself and no one else. Investors should not trust this crook. We believed in the wired world BS. And now with still 800M+ in the bank and increasing revenue the best solution is stiff the shareholders and take everything. Good thing we can all learn from our mistake. And investing with PA is a mistake. I can understand if the company does not have a nickle in the bank. Why can't they do cost reduction measures like everyone else.

FEBRUARY 12, 2009 4:10 P.M.

puzzled wrote:

If the stock is worthless why would anyone be paying 3 cents a share now?

FEBRUARY 12, 2009 5:10 P.M.

geo. wrote:

We should all get together and pool our money and sue him. And let him feel what its like to lose hard earned money

FEBRUARY 12, 2009 5:12 P.M.

Mango wrote:

I once thought of investing in Charter, maybe 5 years ago. But Paul Allen was then doing the same thing with HSAC (High Speed Access Corporation) and screwing its investors, who had believed he was moral. I was smart enough to see the type of person he is. Once burned. . . . .

FEBRUARY 12, 2009 5:43 P.M.

michigan golfer wrote:

sounds just like the rip off kmart did to millions of investors....legal stealing from paul allen

FEBRUARY 12, 2009 6:04 P.M.

Charlie wrote:

Mr. Allen,
As a Charter customer {former advertiser, current subscriber} I am aware of problems which can be corrected with little capital outlay. Many of your companies dollars were wasted with redundancy of employee efforts in the field. Also your advertising sales force were not trained properly. If you want to talk to a customer who wants to better your company e-mail me....myseas@aol.com Good luck !

FEBRUARY 12, 2009 8:14 P.M.

What next wrote:

Wonder if there will be layoffs. They told us as emp we had nothing to worry about just like they told Anheuser Busch. I guess we will know soon enough.

FEBRUARY 12, 2009 8:59 P.M.

Paul Allen and Neal Smit are Domestic Terrorists wrote:

Neal Smit should give back any medals he received from his military career. He has killed off many Americans with this criminal act of "Corporate Terrerism". They are what is wrong with America today.

FEBRUARY 12, 2009 10:50 P.M.

Reza wrote:

said in the report,They are going to give common stock to some of the creditors.
What stock is that any one know how its work?

FEBRUARY 13, 2009 2:04 A.M.

yosteculation wrote:

paul allen is just a rich guy keeping his money busy so it doesnt get taxed. he doesnt run charter. i work in the charter system as a field supervisor, trainer, and quality control. it isnt about paul but just plain out bad management. imagine how bad the gas bill was for the fleet of trucks being driven around for work and yes they get to drive those big bucket trucks home as well. bad inventory, getting parts through charters warehouse is another dilema. no quantity control. money out the door. installation guidlines cost and waste more money than all..cut off and throw away expensive hardware that is good if not excellent but is not as shiney as the new. one cable fitting is about 50 cents, it adds up quick quantifiably. contractors are not cheap, but the average hourly employee will do 25% of the work a contractor will do in a workday, racking up those hours and overtime running their air conditioner in the charter truck watching the ducks go by at the lake park. local internal charter offices are overmanaged. lots of chiefs not enough indians. paul allen is trying to get richer, obviously. wouldnt you? thats the name of the game. charter investors should feel pretty stupid if they still are holding, plenty of warning. a red flag would be the value of charters competetors stock shares, those are not zebras in the streets of TJ.

FEBRUARY 13, 2009 2:08 A.M.

gingivitis wrote:

by the way the MOXI box sucks. It lit on fire in my entertainment cabinet. Charter tried to charge me $600.00 for it.

FEBRUARY 13, 2009 4:14 A.M.

confused? wrote:

I thought if a company filed chapter 11 stock trading would carry on? Am I to understand that my stock will be worth zero? So what happens to the stock? Are there new stocks? Who gets these? Confused?

FEBRUARY 13, 2009 10:31 P.M.

Andy Novak wrote:

In response to Reza,
Fine, the big fish eat the little fish, but let's not call Paul a "Philanthropist", as his bio goes on. He's a crook in my book and I hope he goes down with his yacht....last time I checked It was the second largest one in the world! Ya got my, my wifes, and my deceased mother in laws money to fuel it with. I hope they lock you up soon and not in with your lawyers at the tennis club dormitory.
The Little Guy

FEBRUARY 13, 2009 11:28 P.M.

itsawonder wrote:

back to waistful spending. i work for them and the system i work in they have system techs, ya know in the big bucket trucks doing disco's rather than much needed plant maint. or how about that gas bill? when gas was nearing $5 a gallon they didn't seem to be to concerned about where we bought gas and how much waisted travel we did but now they have this concern all the sudden. and to add to itwe have techs, supervisors, construction dept, and headend techs that get to drive comp. truck home. and some that even live outside the system, and also in this location they had built a brand new office for a more central location for the customer and techs, but the techs that live in their assigned work area have to drive 20-60 miles to report to the office and then back to their assigned area to report to their first job conveinent for the customer maybe but for the techs or even the budget i think not. and to top it all off about 2yrs ago we had our nextel phones taking from us and issued these,$500 PDA's because we were told we were going paperless and all it did was create twice or even tripled the amount of paperwork. so is it paul allen or is it just poor management. and waiste. i think if all that is employed at charter respected the money like it was their own dollar bill charter would be ok and the would be more there for the system upgrades to give better service and also for raises. i don't know about management but the field techs are way underpayed. hope i didn't offend anyone just posting what i see being employed by them. i think its poor management.

FEBRUARY 14, 2009 4:16 A.M.

Horntoad wrote:

This really sucks. These pinheaded greedy idiots should call a meeting of the real shareholders and tell us in person that they stole our money. I'll bet they wouldn't live long enough to laugh about it. Come on out jerkos. HT

FEBRUARY 15, 2009 11:05 A.M.

chtremployee wrote:

in response to itsawonder, you hit the nail right on the head. the same thing goes on in the system i work in and the smaller ones in the area. lots of wasted drive time, and p.o.s. pda's that cause more problems than they are worth.

Copy and paste this information to other Blogs...Just another person who used to believe in Paul.

FEBRUARY 16, 2009 3:17 P.M.

screwed but not kissed wrote:

courts should make allen sell his seahawks and blazers to pay his common shareholders who he has duped out of their investments. america the beautiful humbuck!

FEBRUARY 17, 2009 12:34 P.M.

ftg55 wrote:

where do I sign up for the Class Action lawsuit?

FEBRUARY 18, 2009 10:30 A.M.

bkf wrote:

I'm on board for the Class Action. I bought stock when the company went public. Mr. Allen is a no class thief. Given a chance, I'd pop him in the nose...

America is beautiful. It's up to us to clean out the trash. Anyone that thinks America is not beautiful should consider moving on to their preferred country.

FEBRUARY 19, 2009 2:20 P.M.

Fuc.ked but not smooched wrote:

Fu.ck you Charter and Fu.ck you Paul Allen

FEBRUARY 22, 2009 1:54 P.M.

Give it time wrote:

Wait just wait and see...it will get better...If Paul would help pay down just a little more of that dept then the company would start turning more of a profit that they cant keep...key here is to try to renegotiate while also giving them insurance with a fat payoff check..the trust is leaving that he will help but he is almost there just give in a little more and it will all come back better then before.

FEBRUARY 22, 2009 2:03 P.M.

Just think wrote:

Just think of the money chater would be making if he could help pay that dept down just a little more...then a strong buyout could be in the future...Hey Paul borrow some from Bill doesnt he owe you one :P I mean just think of how much Carter could pull in if the bite the bullet and get out you check book and pay down that dept one and for all then charter will be very very strong. hell give good old Bill part of the compane for a little pay down and watch it grow from there. you wont regret it look at the numbers its there in black and white....Your making more and more every year but intrest is a killer on 20 bill

FEBRUARY 28, 2009 1:27 P.M.

Usta be Charter Empl in MI wrote:

Wow, I feel bad for all the employees who invested their life savings at $19/share, I tried to warn them and we still lost our jobs due to new call centers being built. I invested at $2 and I'm still a loser. I'm in on the class action!!!

MARCH 11, 2009 7:32 P.M.

vern wilson wrote:

why do towns keep charter when CONSUMER REport rates them the worst in the country

MARCH 17, 2009 3:23 P.M.

Get a clue, people wrote:

Charter shares are going to be wiped out by the bankruptcy filing. Paul is putting up $8B new money in order to be the largest shareholder when debt is converted to equity.

Charter is cash-positive before Taxes, Interest and Depreciation. They shed most of their debt (by converting to equity) and they will be throwing off cash like nobody's business.

Those of you who own pre-bankruptcy shares will own nothing afterward.

It is time to start a Class action lawsuit on this well thought out unequivocally unethical at the very least scheme to wipe out shareholders. We cannot let them get away with this.Bondholders and Paul Allen are not going to loose because while it appears that they are loosing some capital, it is actually an exchange of debt for new common shares. In other words and investment for the bondholders and Allen and a theft of poor common shareholders. They say that Allen had common shares too that will be wiped out. But ask them what is the proportion of this to his special class of prefered shares that will not suffer.

MAY 12, 2010 10:16 P.M.

charter techs should go union wrote:

Charter pays 25-40% less than market value to its employees. Comcast starts out at exactly 3 dollars an hour more than Farter.

DECEMBER 16, 2010 12:36 P.M.

Former Employee Lynne wrote:

I too am one who foolishly bought stock as a newly acquired Charter employee. I worked for this cable company for 23 years. Bought stock for $19.00 a share only to have my position eliminated 1 year later. Now, no job and 100 shares of stock totally worthless. I too would like to join in on a class action suit. What they did was completely wrong.

APRIL 19, 2014 2:39 P.M.

Susan M. wrote:

It's never too late to redeem yourself Mr. Allen. As of today, 4/19/2014, Charter Communications stock is trading at $118.43 per share. I had put my trust in you for the reason that I figured that you had to of learned something about business, business relationships, and ethics from one of our country's best, Mr. Bill Gates. I don't believe he would have done business with a scoundrel and I prefer to see the good in you. It now appears that you have Charter Communications on track, and the ability to make amends to the stockholders who believed in you in the very beginning. I, myself, am going to let it be known that I held 100 shares and had purchased 30 shares each for my two sons. This must seem miniscule in the world in which you live and that's fine, it's all relative, but to others, it was to help build and facilitate a future that we could see, much like you saw for your company. I am not so naïve to realize that there are downsides to investing, but due to the bankruptcy, which came like a thief in the night and it was all over. Do the right thing, I believe the initial investment would be the right thing to do.
Sincerely, Susan A. Marlow
Email - jm4hdm@hotmail.com

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